Subsidiary Company

Forming a subsidiary company in the United Arab Emirates (UAE) involves a series of steps and
considerations specific to the country’s legal and regulatory framework. The UAE consists of seven
emirates, each with its own regulations, but the process of setting up a subsidiary generally follows a
similar pattern across the emirates. Here’s a general overview of the process:

1. Choose the Emirates:

Select the emirate where you want to establish your subsidiary company. Common choices include Dubai, Abu Dhabi, and Sharjah. Each emirate has its own business environment, regulations, and advantages.

2. Determine Business Activity:

Specify the nature of your business activity. This is important for choosing the appropriate legal structure and obtaining the necessary licenses.

3. Choose a Local Partner or Sponsor:

For many business activities, a local UAE partner or sponsor is required. This sponsor usually holds at least 51% ownership in the company, while the foreign investor holds the remaining 49%. However, there are exceptions for certain free zones.

4. Select a Legal Structure:

Choose the legal structure that suits your business needs. Common options include Limited Liability Company (LLC), Free Zone Company, and Branch of a Foreign Company. Each structure has its own ownership and operational requirements.

5. Reserve a Trade Name:

Reserve a unique trade name for your subsidiary that complies with UAE naming regulations.

6. Draft Legal Documents:

Prepare the necessary legal documents, including the Memorandum of Association (MOA) and the Articles of Association (AOA). These documents outline the company’s purpose, structure, and internal regulations.

7. Obtain Initial Approvals:

Submit the legal documents and required information to the relevant authorities for initial approvals. This includes approvals from the Department of Economic Development (DED) or the relevant free zone authority.

8. Obtain Trade License:

Upon receiving initial approvals, apply for a trade license from the DED or the appropriate free zone authority. The trade license specifies the business activities your subsidiary is allowed to undertake.

9. Register with Local Authorities:

Register your subsidiary with local authorities, including obtaining a commercial registration certificate and any additional permits specific to your business activity.

10. Lease Office Space:

If required, lease office space in the designated location. This is a common requirement for obtaining a trade license.

11. Apply for Visas:

If you plan to hire employees, apply for their work visas through the UAE’s immigration system.

12. Open a Bank Account:

Open a corporate bank account in a UAE bank to facilitate financial transactions.

13. Comply with Regulations:

Ensure compliance with all local regulations, including labor laws, tax obligations, and reporting
requirements.

14. Start Business Operations:

Once all approvals are obtained, licenses are secured, and necessary infrastructure is in place, you can start your subsidiary’s business operations.

It’s important to note that regulations and processes can vary between the emirates and free zones. Working with legal and business consultants familiar with UAE company formation can help ensure a smooth and successful process. Keep in mind that certain sectors might have additional requirements or restrictions, and staying updated with UAE’s changing business environment is crucial for ongoing compliance.